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The SDP has proposed a set of comprehensive measures to tackle the economic problems that Singapore faces. These include initiatives to tackle immediate problems such as the income inequality as well as longer-term proposals to boost productivity and increasing opportunity for Singaporeans.
SDP’s Treasurer Ms Chong Wai Fung (pictured) kicked off the event by laying out the foundations of the SDP’s plan. She pointed out that Singapore needed to move away from a model of GDP-growth-at-all-cost and driving our national values based on monetary considerations.
Instead, Ms Chong said, Singapore needed an economic system which emphasized fairness and compassion, so that all Singaporeans can prosper and move forward together as one nation.
Vice-Chairman John Tan highlighted the economic problems that Singapore faced the biggest of which is income inequality and the pernicious effects it wreaks on society.
He also spoke on the retirement poverty levels and lack of transparency and accountability of our sovereign wealth funds.
Dr Chee Soon Juan enumerated the specific policy ideas to address these problems. To tackle income inequality the SDP will implement:
I. Implement minimum wage. SDP recommends a minimum wage of $7 per hour as a start. The Plan also stipulates the setting up of a Wage Equity Commission (WEC) comprising of trade unions, government representatives, employers, economic experts, academics, NGOs, and professional organisations. The WEC will:
1. recommend to the government the level of minimum wage at appropriate intervals,
2. monitor the impact of the law on the economy, and
3. empowered to act on non-compliance and wage manipulation.
II. Introduce retrenchment insurance. The SDP will introduce the RESTART (Re-Employment Scheme and Temporary Assistance for the ReTrenched) programme where retrenched workers will be able to get financial assistance based on the following schedule:
1. 1st 6 months after retrenchment: 75% of last drawn salary, 2nd 6 months: 50% of last drawn salary, 3rd 6 months: 25% of last drawn salary.
2. MOM will assist participants in seeking re-employment and matching them on salary and skills to the new jobs. Participants cannot reject more than 3 job offers.
3. The RESTART payouts will be capped of the prevailing median wage.
4. RESTART will be funded by state (80%), employers (10%), and employees (10%). The programme will require a $2 billion budget (annualised basis).
III. Recalibrate tax structure. The current tax regime has contributed to the wide wealth divide in Singapore. In order to remedy this, the SDP proposes the following:
1. The top personal income tax rate will be returned to 28% (which was reduced to 20% in 2002) for the top 1% income earners (average annual income of $700,000). This revenue will help pay for the RESTART programme.
2. Estate duty, abolished in 2008, will be reinstated for homes of the super-rich – those with an exemption threshold of $20 million.
3. Increase the GST for luxury items and abolish GST for basic food items, school supplies, and drugs and medical treatment.
IV. Fix social security. The majority of retirees do not have enough income to retire on because their savings have been depleted through housing loan payment and Medisave deductions. The SDP plan proposes:
1. Returning CPF savings in full after retirement.
2. Introducing a strictly voluntary opt-in clause for those who want their savings returned in instalments.
3. Removing land cost from HDB price to reduce housing loans paid through the CPF. This is done through the proposed Non-Open Market flat scheme. (See here)
4. Lowering healthcare costs by scrap Medisave and return the $43,500 withheld to members’ CPF accounts. The government’s portion of the country’s total healthcare expenditure should be increased from the current 30% to 70% (in line with international norms).
5. Increasing social spending for the elderly and the needy. Currently the government spends less that 1% of the nation’s budget assisting this segment of the population while it lavishes one-third of the budget on defence, internal security and foreign affairs.
V. Make economic system transparent and accountable. The two sovereign wealth funds currently operate in a non-transparent and unaccountable manner. Also, our tax haven status undermines our international stature. To rectify these problems, the SDP plan will:
1. Remove tax haven practices and aid the international effort to stop wealthy tax evaders and avoiders from hurting the global economy.
2. Resume the programme originally started by the Government to divest GLCs under Temasek Holdings. Only those entities with security concerns (such as Singapore Power and SingTel) will be retained under Government control.
3. Reform GIC management through the following measures:
- The GIC shall submit annual reports to Parliament for scrutiny. The reports shall include investment activity and full financial accounts.
- Management shall provide investment strategies and risk management of the strategies, including providing accounts of corporate social responsibility.
- Ministers, MPs and their relatives shall not be permitted on governing board or management team.
- GIC officials shall be appointed by the President subject to a public confirmation process by Parliament.
VI. Foster innovation and boost productivity. Labour productivity is poor and innovation is sorely lacking in Singapore. To create greater opportunities for our people, the SDP recommends:
1. Developing our SMEs by increasing the credit supply for SMEs, re-structuring the tax regime to assist Singaporean SMEs rather than foreign MNCs, bring down land costs (which will lower office rental), and scale back GLCs.
2. Reform the education system. This is discussed in our education policy (see here).
3. Emphasize intrinsic motivation by opening up our political space.
4. Empower workers by freeing the labour movement and trade unions.
To read our paper A New Economic Vision: Towards Innovation, Equal Opportunity, and Compassion
click here for the Abridged version (16 pages)
click here for the Full version (105 pages)
More event photos at SDP’s facebook photo album.